1996 (7) TMI 432 - DSC - Companies Law

Issues Involved:
1. Request for de-Notification of the applicants.
2. Summoning and cross-examination of the Custodian.
3. Application of principles of natural justice.
4. Interpretation of section 3(2) and section 4(2) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1962.
5. Judicial review of the Custodian's decision.

Issue-wise Detailed Analysis:

1. Request for de-Notification of the applicants:
The applicants sought de-Notification, arguing that the Custodian's satisfaction, which led to their Notification, was questionable. They emphasized that the Notification had caused grave prejudice, attaching their assets and properties. The applicants contended that the Custodian's decision lacked sufficient basis and was influenced by external directives, particularly a letter from the Ministry of Finance dated 8-6-1992.

2. Summoning and cross-examination of the Custodian:
The applicants requested that the Custodian be summoned for cross-examination to ascertain the basis of his satisfaction in issuing the Notification. They argued that cross-examination was essential for a just and effective determination of the main Petition, citing principles of natural justice and the necessity to understand the Custodian's mental state and knowledge at the time of Notification.

3. Application of principles of natural justice:
The applicants argued that the principles of natural justice were violated as they were not given a hearing before being notified, and the Act did not provide for a post-decisional hearing. They cited several cases to support their claim that a fair opportunity to explain, including cross-examination, is a fundamental aspect of natural justice.

4. Interpretation of section 3(2) and section 4(2) of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1962:
The applicants contended that under section 3(2), the Custodian must be satisfied before notifying a person, and this satisfaction was in question. They argued that section 4(2) allowed the Court to review the Custodian's decision and that the Court should consider whether the Custodian had adequate material and satisfaction at the time of Notification. The respondents, however, argued that the Court's role under section 4(2) was to apply its own mind to the facts and circumstances, not to review the Custodian's satisfaction.

5. Judicial review of the Custodian's decision:
The respondents contended that the applications for de-Notification were essentially a judicial review of the Custodian's decision. They argued that judicial review focuses on the decision-making process rather than the merits of the decision itself. They cited legal authorities to support their claim that cross-examination is rarely permitted in judicial review proceedings unless essential for justice.

Judgment Summary:
The Court dismissed all applications for cross-examination of the Custodian. It held that under section 4(2), the Court itself must apply its judicial mind to the facts and circumstances available, and the satisfaction of the Custodian is irrelevant. The Court emphasized that the applicants must make out a case before the Court, showing they are not involved in any offence or have no nexus with any notified party. The Court concluded that the principles of natural justice were not violated as the Act provided for a post-decisional hearing before the Special Court. The Court agreed with the respondents that no question of cross-examining the Custodian arises in these Petitions.

Conclusion:
All applications were dismissed with no order as to costs. The Court clarified that the role of the Special Court under section 4(2) is to make an independent determination based on the material before it, irrespective of the Custodian's satisfaction at the time of Notification.

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